The Housing Bubble

A housing bubble occurs when property prices rapidly increase beyond their true value, often fueled by speculation, easy credit, and high demand. People buy homes expecting prices to keep rising, which drives prices even higher. Eventually, confidence drops or economic conditions change, and people start to sell their homes. This causes prices to fall quickly, sometimes causing widespread financial problems for homeowners and lenders. The bubble bursts when the market corrects itself, reverting prices closer to their sustainable levels. It’s similar to a soap bubble—expanding rapidly until it pops.